How this calculator works
An LED and an incandescent bulb produce a similar amount of light, but the LED turns a much larger share of its electricity into light rather than heat. The comparison here has two parts. The energy part multiplies power by the hours the bulb runs to get kilowatt-hours, then by the price of electricity. The replacement part divides those hours by the rated life to see how many bulbs are needed. Both parts matter: an incandescent bulb is cheap to buy but needs replacing many times, while an LED costs more up front and lasts far longer. The payback period divides the extra up-front cost of the LED by the yearly saving.
Formula
annual hours = hours per day x 365. energy per year = power x annual hours / 1,000 x number of bulbs. bulbs over the period = number of bulbs x ceiling(annual hours x years / rated life). saving per year = (incandescent energy cost - LED energy cost) + (incandescent bulb cost - LED bulb cost). payback = extra cost of the LEDs / saving per year.
Worked example
Ten 9 W LEDs and ten 60 W incandescent bulbs each running 5 hours a day use 164.25 kWh and 1,095 kWh a year. At 15 cents per kWh that is $24.64 against $164.25. Counting replacements, the LEDs cost $4.87 a year in bulbs and the incandescent bulbs $22.81, so the saving is about $157.56 a year. The extra $27.50 for the LEDs pays back in about 0.17 years, or two months.
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Frequently asked questions
Why does the payback come out so short?
Because the extra up-front cost is small compared with a year of electricity. The payback lengthens if electricity is cheap, if the bulbs run only a few minutes a day, or if the LEDs cost much more than the incandescent bulbs.
Does the rated life really last that long?
LED life is usually quoted as the hours until output falls to 70 percent, not until the bulb fails, and heat shortens it. A lamp in an enclosed fixture runs hotter and may not reach its rated hours.
Should I compare by lumens rather than watts?
Yes, when matching brightness. A 9 W LED is roughly equal to a 60 W incandescent in light output. Comparing wattages alone can leave a room dimmer or brighter than before.
Do dimmers or timers change the calculation?
They change the hours, which is the largest factor. Reduce the daily hours to see the effect; the rest of the arithmetic is unchanged.